Hospital medical staff committees, especially those involved in staff
credentialing decisions, exist in a legal limbo. With the exception of some
hospitals in small communities that are short of physicians, the members of a
hospital’s medical staff are competitors. Thus, medical staff committees are
groups of independent small businesspersons making decisions that affect the
ability of other small businesspersons to compete with them. This is facilitated
by a larger business, the hospital, that controls essential facilities, delegating
critical management decisions to this group of independent contractors.

Hospital administration based on decision making by independent committees
of physicians can be traced to the Joint Commission on the Accreditation of
Healthcare Organizations (Joint Commission). The Joint Commission was
originally a joint endeavor by the American Hospital Association (AHA) and the
American College of Surgeons (ACS). The AHA wanted to professionalize the
management of hospitals but needed the support of the physicians. The ACS
could see the benefit in the professionalism of hospital management but did
not want to concede to administrators the power to control the medical staff
appointments process. Out of these needs and aspirations the Joint
Commission was born. The surgeons agreed to support efforts to reform
hospital management as long as the hospital administrators agreed not to
interfere with the prerogatives of the medical staff. The result was an uneasy
truce between administrators and physicians on the medical staff.

Because of its basic nature as a group of competitors conspiring to set the
terms of the competition, the authority of a medical staff committee is legally
suspect. This is the inverse of the prevailing opinion that medical staff
committees are legally favored, except when they make biased decisions. It is
important to understand the basis for turning this view on its head. If medical
staff committees are legally favored unless they make biased decisions, then it
should be relatively easy to establish criteria for making decisions that will
avoid the biases that concern the courts. If, on the other hand, medical staff
committees are inherently suspect, attempts to make their decisions legally
supportable will result in ever more complicated rules and procedures, and
these rules and procedures will be constantly under attack with the
development of new legal theories. This has been the case, prompting the
Congress to pass a law reducing legal attacks on peer review actions.